Elan board rejects higher Royalty Pharma bid

Bloomberg and AFP, London

Tue, Jun 11, 2013 - Page 15

Elan Corp’s board of directors unanimously rejected a higher takeover offer from Royalty Pharma, an investor in royalty streams from pharmaceuticals, and has instructed advisers at Citigroup Inc to assess several “unsolicited corporate enquiries.”

Royalty Pharma last week raised its offer to buy Elan by 5 percent to US$6.7 billion, the second increase in its attempt to take over the Irish biotechnology company.

The all-cash offer of US$13 per US depositary receipt is higher than a previous bid of US$12.50 and compares with the US$13.44 closing price on Friday. The new bid potentially values each Elan share at as much as US$15.50 if the multiple sclerosis drug Tysabri meets certain sales and development goals. If all three targets are met, Royalty would pay a contingent value right of US$2.50 a share for a total of US$8 billion.

“Royalty Pharma’s revised offer continues to grossly undervalue Tysabri,” Elan’s board said in a statement. “The Elan board and executive management remain unanimous in recommending the four previously announced transactions.”

Elan chief executive officer Kelly Martin, a former Merrill Lynch & Co banker, has announced deals including a US$1 billion investment in Theravance Inc’s royalties. Elan shareholders will vote on the proposals on Monday next week, which will determine whether Dublin-based Royalty will go ahead with its unsolicited offer.

Elan’s shareholders will vote to consider four transactions proposed after Royal Pharma’s takeover bid, including the investment in Theravance’s royalties. Shareholders will also vote on a US$340 million takeover of Vienna-based AOP Orphan Pharmaceuticals AG, the spin-out of an experimental drug called ELND005 for Alzheimer’s disease to Speranza Therapeutics and a US$200 million share repurchase program.

Separately, Anglo-Swedish pharmaceuticals group AstraZeneca yesterday said it had agreed to buy US firm Pearl Therapeutics for up to US$1.15 billion.

“AstraZeneca announced today that it has entered into a definitive agreement to acquire Pearl Therapeutics, a privately held company based in Redwood City, California, focused on the development of inhaled small-molecule therapeutics for respiratory disease,” it said in a statement.

“The acquisition will give AstraZeneca access to a potential new treatment for chronic obstructive pulmonary disease, currently in late-stage development, and inhaler and formulation technology that provides a platform for future combination products,” the statement said.

London-listed AstraZeneca will pay US$560 million initially upon completion. However, the price can rise up to US$1.15 billion, depending on sales, passing development and regulatory milestones.